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1. Which of the following best describes the concept of risk
management in accounting?
a) Identifying potential risks and implementing strategies to
minimize their impact on financial statements.
b) Developing strategies to increase the likelihood of
achieving financial goals.
c) Assessing the impact of risks on shareholder value.
d) Analyzing historical financial data to predict future
risks.
Answer: a) Identifying potential risks and implementing
strategies to minimize their impact on financial statements.
Rationale: Risk management in accounting involves
identifying potential risks that may affect the accuracy and
reliability of financial statements. Accountants then
implement strategies to minimize the impact of these risks,
ensuring the integrity of the financial reports.
2. Which of the following is NOT a component of the risk
management process?
a) Risk identification
b) Risk assessment
c) Risk mitigation
d) Risk avoidance
Answer: d) Risk avoidance
Rationale: Risk avoidance involves completely staying
away from activities or investments that pose risks. In riskÂ
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